Monday 30 October 2017

Keppel-KBS US Reit - Quick Review - Offering Price is US$0.88


Summary

  1. Keppel-KBS US REIT offers the distribution yield for Forecast Year 2018 of 6.8% and Forecast Year 2019 of 7.2%. This translate to 5.8% yield growth
  2. Net Asset is US$0.84 translate to 1.04 P/B
  3. Rental escalation between 2-3% for 97.5% of current lease
  4. Positive rental reversion might be possible as the current passing rate is lower than market rate
  5. weighted average lease expiry (“WALE”) by NLA as at 30 June 2017 of 3.7 years (ManuLife is 5.3). No single year has more than 20% of total leases expiring which is good to diverse the concentration risk.
  6. 36% gearing providing additional debt headroom of approximately US$131.6 million before reaching 45%, however right issues might be coming in the future.
    • Interest rate is floating at average of 3.x% vs ManuLife fixed interest rate around 2.x%
  7. Interest coverage ratio based on FY2017 is 3.3x whereby ManuLife is 5x
  8. Occupancy Rate is 90% whereby ManuLife is 95%
  9. Debt maturity earliest will be in FY2021 with the average interest of 3.35%. Borrowing are dominated in US dollars hence provide natural hedge to the currency risk.
  10. Diversified tenant base with limited tenant concentration with top tenant contribute not more than 22.3%, led by tenants in growth and defensive sectors such as technology, finance and insurance, professional services as well as medical and healthcare
  11. All the 11 property are freehold mixture of Grade A and Grade B office (ManuLife is mainly on Grade A) and the first distribution, which will be in respect of the period from the Listing Date to 30 June 2018 (“First Distribution”), will be paid by the Manager on or before 30 September 2018.
Beware of the forex loss when in the future they issue rights and you try to subscribe more than what you allocated and do not manage to get it. Look at HWZ forum for some of the sharing on ManuLife rights

Download KEPPEL-KBS US Reit IPO Prospectus here

In Summary,
I am favouring ManuLife (Not vested) and I think the main drawback is the 1st distribution is still far away - don't see why I want to lock my money so long.

Note:
“Cash Rental Income” is defined as rental income and recoveries income without straight-line adjustments and amortization of tenant improvement allowance, leasing commissions and free rent incentives.



OVERVIEW OF KEPPEL-KBS US REIT

Keppel-KBS US REIT is a Singapore REIT established with the investment strategy of principally
investing, directly or indirectly, in a diversified portfolio of income-producing commercial assets
and real estate-related assets in the key growth markets of the United States.

The IPO Portfolio comprises a balanced and resilient mix of Class A and B office buildings in the CBD and suburban areas, well-served by key transportation nodes and supporting amenities.

KEY INVESTMENT HIGHLIGHTS

Keppel-KBS US REIT offers investors the opportunity to gain exposure to the attractive US office real estate sector via a publicly listed platform, backed by a distinctive portfolio of high quality, income-producing office buildings, and backed by strong Sponsors, as well as an experienced management team focused on delivering long-term sustainable distribution and total returns to Unitholders



 Dividend


Keppel-KBS US REIT offers the distribution yield for Forecast Year 2018 of 6.8% and Forecast Year 2019 of 7.2% translate to 5.8% yield growth.

Approximately 79.5% and 75.2% of Cash Rental Income for Forecast Year 2018 and Projection Year 2019 is derived from existing leases, respectively. Furthermore, at least 75% of interest expense will be hedged.

Assumption to achieve 5.8% growth ,
The distribution yield growth from Forecast Year 2018 to Projection Year 2019 of 5.8% is underpinned by built-in rental escalations, positive rental reversion opportunities and potential increase in IPO Portfolio occupancy level.

Organic growth opportunity to growth the dividend
Built-in rental escalations,
Approximately 97.5% of existing leases by Cash Rental Income and 97.5% of existing leases by NLA have built-in rental escalations. The rental escalations generally range from 2.0% to 3.0%.


Positive rental reversion opportunities,
The IPO Portfolio has a WALE by NLA as at 30 June 2017 of 3.7 years, with below market average rents for expiring leases. This offers the opportunity to lease expiring space at potentially higher
market rent rates.





Lease up opportunities, 
Several of the Properties have the ability to lease up, given that their current occupancy rates are below the market average, and hence lead to potential growth in rental income



Lease Profile


Around 15% of the lease will be up for renewal for each year


Income/Revenue Breakdown

Well distribute tenant concentration with top tenant contribute not more than 22.3% by cash rental income




Gearing

As at the Listing Date, Keppel-KBS US REIT will have total borrowings of US$289.4 million, 100.0% of which is unsecured. This translates to an Aggregate Leverage of approximately 36.0%, providing an adequate debt headroom of approximately US$131.6 million to fund Keppel-KBS US REIT’s future growth



Properties

List of the 11 Properties and the statistic to show the properties are located in the growth area compare to the national average




Fees

Management Fees
Base Fees,
10% per annum of Keppel-KBS US REIT’s Annual Distributable Income (as defined in the Trust Deed and calculated before accounting for the Base Fee and the Performance Fee).

Performance Fee,
25.0% of the difference in DPU in a financial year with the DPU in the preceding financial year (calculated before accounting for the Performance Fee but after accounting for the Base Fee in each financial year) multiplied by the weighted average number of Units in issue for such financial year.

The Performance Fee is payable if the DPU in any financial year exceeds the DPU in the preceding
financial year, notwithstanding that the DPU in the financial year where the Performance Fee is payable may be less than the DPU in any preceding financial year
.
For the avoidance of doubt, where the DPU in a financial year is less than the DPU in any preceding
financial year, the Manager shall not be required to return any Performance Fee paid to it in any preceding financial year.

Trustee’s Fee ,
0.015% per annum of the value of the Deposited Property, subject to a minimum amount of S$14,000 per month, excluding out-of-pocket expenses and GST.

Property Management Fee,
Charged based on gross revenue income and ranges from 1.5% to 3.0% of the gross revenue income

Others
1% Acquisition Fee
0.5% Divestment Fee
3% of Project Cost Development Management Fee

Unit Lock up period

100% : 6 months from the date of date of issuance
50% :12 months from the date of issuance

Saturday 28 October 2017

Singapore REIT Result, Dividend Yield, Gearing, Interest Coverage Ratio and Book Value

Singapore REIT Result - Update 9 Nov 17

Price is delayed-auto update and the rest of the field I will update manually.

You can download the file from Singapore Reit Data for your own analyst
  1. For the yield, I am using either the last year total dividend or based on the assumption of the last quarter dividend to derive the total dividend for current year
  2. For update date, I will update as soon as possible whenever I am available.
Please do your own diligence as the data here provided as information only and there might be a data entry error.

All the best for all of you.

In the future you can refer to Singapore REIT tab to get the information

Following are the REIT yet to announce their result for this earning season


Company Name Next Update Dividend (Cent) Ex-Date Pay Day Remarks
Ascendas Real Estate Investment Trust 30-Oct-17 8.108 3 No 29 Nov After Market
OUE Hospitality Trust 1-Nov-17 1.36 7 No 1 Dec After Market
Far East Hospitality Trust 2-Nov-17 1.03 8 Nov 15 Dec After Market
Frasers Logistic & Industrial Trust 2-Nov-17 1.68 8 Nov 19 Dec Before Market
Lippo Malls Indonesia Retail Trust 2-Nov-17 0.86 13 Nov 29 Nov After Market
OUE Commercial Real Estate Investment Trust 2-Nov-17 1.15 After Market
Manulife US REIT 3-Nov-17 1.6 Before Market
Ascendas Hospitality Trust 6-Nov-17 2.73 10 Nov 12 Dec After Market
EC World REIT 8-Nov-17 1.44 14 Nov 28 Dec After Market
IREIT Global 9-Nov-17 1.42 After Market
Parkway Life Real Estate Investment Trust 9-Nov-17 3.37 15 Nov 8 Dec Before Market


Do scroll to the right for more columns

Thursday 26 October 2017

CapitaLand Retail China Trust (CRCT) Q3FY17

Overall Summary

  1. Slight drop of occupancy from 96.2% to 95.6% compare to previous quarter and drop in dividend compare to previous quarter due to disposal of CapitaMall Anzhen.
  2. CapitaMall Minzhongleyuan have negative rental reversion for 270 sq m area -Even it is small area, kinda disappointed to see this though as previously reversion for Q1FY17 was 35.1% and Q2FY17 64.4%.
  3. Bulk of the remaining lease to expire in Q417 come from CapitaMall Minzhongleyuan (26.1%) and CapitaMall Wuhu (14.1%). Let see if CapitaMall Mingzhongleyuan will be able to have good rental reversion as Q117 or Q217. As for CapitaMall Wuhu, nothing to be expected will see what the Manager will do with Wuhu.
  4. Overall rental reversion is positive (average Q1FY17 was 3.6%, Q2FY17 was 7.1%, Q3FY17 is 7.5%)
  5. Gearing at 35.4% with the borrowing cost at 2.44% and Interest coverage ratio at 6 times
  6. Net Asset Value at $1.61

Dividend History for 2017

Dividend drop against Q217 from 2.62 cent to 2.37 cents. I am Expecting one time distribution for Q417 to level up the DPU due to the loss of income from CapitaMall Anzhen or a new acquisition to replace CapitaMall Anzhen


Q1 0.0274Q2 0.0262Q3 0.0237 (to be paid in Q4)

Debt Profile

Lease Profile

My Previous post on CapitaLand Retail China Trust




Monday 23 October 2017

CSE Global 1H17 - Opportunity or Falling knife?

Update on 9 Nov 17

CSE Global Limited (CSE) is a global technologies company listed on the Singapore Stock Exchange,with an international presence spanning the Americas, Asia Pacific, Europe, Middle East and Africa regions. CSE is a leading systems integrator, focusing on the provision and installation of a variety of control systems as well as turnkey telecommunication network and security solutions, targeting the oil & gas, infrastructure and mining industries.

The Group has now more than 1,000 employees worldwide, and operates a network of 39 offices across the globe, generating more than 90 percent of its revenues outside its home market.

Group Operation in the following Industry segment
  1. Mining & Mineral
  2. Infrastructure
  3. Oil & Gas

Revenue and the profit has been in the declining trend, the major drag is from Oil & Gas, current Infrastructure is holding the drop due to Oil & Gas

Revenue

1H17 FY16 FY15
Mining & Mineral 11,100 22,032 13,062
Infrastructure 42,300 58,902 53,936
Oil & Gas 106,600 236,835 344,956


EBIT

1H17 FY16 FY15
Mining & Mineral 300 1,924 1,634
Infrastructure 6,200 8,362 8,245
Oil & Gas 1,900 17,274 30,623

Dividend Paid in the past has been 2.75 cents for the past 3 years (2014 on-ward). CSE Global has re-iterate to keep 2.75 cents for FY17. For 1H17, they have declare 1.25 cents which cost around  $6.5 million and for the remaining 1.5 cents will cost around $7.7 million based on the current no of shares 516,067,852.

1H17 net profit is around $6 million.

Net Asset Value stand at 43.52 cents

Insider has been selling since Feb 17, here for the detail.

Another insider selling 1,867,600 shares on 30th Oct






Friday 20 October 2017

Frasers Commercial Trust (FCOT) Q4FY17

Overall

  1. We have yet feel the impact of HP lease expiry as the 1st tranche only expire in 30 Sep and next will be 30 Nov
  2. Between now to 1Q18 will need to assume lost of income around 18% of gross rental
    1. Are you ready to accept the worst scenario? 
    2. However the place to be vacated out passing rent is current below the market rate
  3. Positive rental reversion for Q417 due to central park
  4. WALE for Singapore office is pretty short which around 1 year plus
    1. To note, office property lease expiry will be around 7.7% gross rental
    2. Passing rent and current rent not much a big gap.
    1. Based on the average 3-5 years lease period, the likely worst rental reversion may come in FY18 on-ward as office rent was on uptrend from 2014 to 2015 (Wrong???)

Dividend

As expected, there is no catalyst for the dividend growth. For Q417 the dividend is lower by 1.6% compare to last year Q417 at 2.407 cent even with 18% Management fees to be paid by FCOT Units. In Q416, no management fees paid in unit.

 

 

 

 

 

 

 

 

 

 

 

Lease Expiry Profile

  1. 33.8% of gross rental will expire in FY18
  2. Hewlett-Packard Enterprise confirm not renewing 6.6% of it
    1. Management has manage to rent out 61,000 out of 178.843 sf and from the rental revision slide, seems like the management has achieve rental +1.1% what HPE has paid
  3. Next blow seem will come from  Hewlett-Packard Singapore Pte Ltd (HPS) which account 11.1% of FCOT rental and will expire in 30 Nov 2017 - This will likely push down the dividend.
  4.  Will we see negative rental reversion in FY18?
    1. Grade B CBD rent is $7.3 
      1. CSC passing rent is $7.62 and it is account for 6.3% of gross rental income
      2. 55 Market Street passing rent is $7.3 
    2. Business Park (city) rent is $5.55 and ATP passing rent is $4
      1. Do you see this as a jewel in crisis?
    3. Central Park passing rent is $554 vs current $700 likely will achieve positive rental reversion. This might explain why central park rental boost the portfolio positive rental reversion




 

 

 

 

 

 

 

 

 

 

 

Debt Profile

  1. No debt maturing until August 2018
  2. Debt expiring in any one financial year no more than S$182 million
  3. 91% of gross borrowings on fixed rate

Previous Post of Frasers Commercial Trust

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